Festive Season Sees Gold Prices Soar, Consumers Turn Selective

Gold prices have surged during the festive season, causing jewellery buyers to be more selective and value-conscious. Despite the sharp rise in prices, driven by global uncertainty, central bank buying, investment demand, rupee depreciation, and higher import costs, consumers are not postponing purchases altogether.

Instead, they are opting for lightweight jewellery, lower-carat pieces, smaller-ticket purchases, and exchanges of existing gold to keep spending in check. Industry experts expect gold purchase volumes to be lower due to elevated prices, but the value of purchases is likely to remain higher as gold prices are significantly above last year's levels.

According to Himank Sharma, Director at Crisil Ratings, 'This year is likely to be a classic case of lower volumes but higher value.' Consumers may buy fewer grams of gold, while spending more due to elevated prices. Saumil Gandhi, Senior Analyst, Commodities at HDFC Securities, notes that traditional festive products such as gold chains and earrings will continue to see demand due to their cultural significance.

However, consumers are likely to reduce the weight and purity of their purchases to manage higher prices. Gold prices have risen sharply from last year's levels, with a 50-60% increase in price per 10 grams, making it more expensive for consumers to buy gold jewellery.